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Question

Prepare the bad debts account, provision for bad debts account, profit and loss account and balance sheet from the followii information as on December, 31, 2011.
(Rs.)
Debtors 80,000
Bad Debts 2,000
Provision for bad debts 5,000
Adjustments
Bad debts Rs. 500, Provision on debtors @ 3%.

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Solution

Dr Bad Debts Account Cr
DateParticularsJFAmt. (Rs)DateParticularsJFAmt. (Rs)
2011
Dec31
To Balance b/d2,0002011
Dec
31
By Provision Bad Debts A/c2,500
Dec
31
To Sundry Debtor's A/c
500

2,5002,500
Dr Provision For Bad Debts Account Cr
DateParticularsJFAmt. (Rs)DateParticularsJFAmt. (Rs)
2011
To Bad Debts A/c2,5002011
By Balance b/d (Old Provision)5,000

To Profit and Loss A/c (b/f)
To Balance c/d @ 3% on
115
79,500
2,385

5,0005,000
Balance Sheet
DateLiabilitiesJFAmt. (Rs)DateParticularsJFAmt. (Rs)


Debtors
(-) Bad Debts
8,000
500

(-) Provision for Bad Debts 2,385

77,115
Dr Profit and Loss Cr
ParticularsAmt. (Rs)ParticularsAmt. (Rs)
To Bad Debts
(+) Further Bad Debts
2,000
500
By Old Provision for Doubtful Debts5,000
(+) New Provision for Bad Debts2,385
4,885
To Balancing Figure115
5,0005,000

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